Though Blockchain and Bitcoin are very closely related, they are not the same thing and therefore cannot be used interchangeably. So, if you are among those who have been taking these two terms as alternatives, this article is very much for you. Read this article to know the key differences between the two by marking the very thin demarcation.
Blockchain is the technology behind Bitcoins and other cryptocurrencies
Blockchain is the distributed ledger technology (DLT) on which the cryptocurrencies are based upon. Here lies the striking difference between the two. In fact, cryptocurrencies are just one of the use cases out of the myriads of blockchain uses. Bitcoin is considered the very first example of blockchain in action and therefore, without blockchain there would be no Bitcoins. That is why these 2 names are often mistaken by people to be similar.
Decentralized ledger Vs Decentralized digital currency
The word ‘decentralization’ applies for both and therefore it attracts massive confusion. Bitcoin is a decentralized digital currency, or a peer-to-peer electronic payment system, that enables users to anonymously transfer Bitcoins without the interference of any third-parties like a bank or any other financial institutions or the government. Therefore, Bitcoin is just one classic example of cryptocurrency, and the blockchain technology powers other cryptocurrency networks as well, apart from Bitcoin. So, although Bitcoin uses blockchain technology to trade digital currencies, blockchain is much more than that.
Decentralization in the case of blockchain means that the ledger is well maintained and structured. This means that there is no single copy of the ledger and also no single authority to control it. In simple terms, when a user decides to participate in maintaining a blockchain network, he needs to keep an updated electronic copy of the blockchain data, in synchronization with the copies of other users.
Bitcoin is about anonymity while blockchain focusses on maintaining transparency
With Bitcoin, the transactions are anonymous. Even though the activities are visible on the network, due to the encryption, it is not possible to figure out the specifics of the transactions. Whereas, blockchain network makes all the transactions accessible and viewable by all the parties. Also, all the related parties have the liberty to access the data through one single network.
Blockchain has more applications apart from Bitcoin
Blockchain technology is a wider term under which Bitcoins and other cryptocurrencies fall. Blockchain technology has myriads of applications in e-commerce, healthcare, insurance, and many other sectors. On the other hand, while Bitcoin has limited applications, people turn to it only for investment purposes or for trading purposes.
Difference in motto
Bitcoin aims at simplifying and increasing the speed of transactions. On the other hand, blockchain technology aims at providing a decentralized, low cost and secured system for the various business environment.
Difference in trading capacities
Bitcoin can only help in transferring currency between its users, whereas, blockchain can be used to transfer various things ranging from information to stocks and property ownership rights. This means the currency trading capability of Bitcoin is limited, whereas blockchain can literally transfer anything easily, starting from currencies to stocks.
Therefore, Bitcoin and blockchain are vast concepts that are in no way overlapping. Crypto investors should have the basic and fundamental knowledge about the 2 terms. Bitcoin offers a lot of ROI (return on investment) when compared to other classes of assets. But investing in them without understanding them clearly could call for serious financial disasters. Though it is not possible to deploy Bitcoin for everyday purposes, blockchain technology has a lot of other applications.
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